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Financial Analysis of Office Depot

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Financial Appraisal of Office Depot
Part 1 Background introduction for Office Depot
Office Depot is a supplier of office products and services. The company's selection of brand name office supplies includes business machines, computers, computer software and office furniture, while its business services encompass copying, printing, document reproduction, shipping, and computer setup and repair. An S&P 500 company, Office Depot generates revenues of over US $14 billion annually and has 42,000 employees worldwide. It is headquartered in Boca Raton, Florida. Office Depot is one of the biggest office supplies retailers, but its sales revenue decreased dramatically 26% from 14.5 billion dollars in 2008 to 10.7 billion dollars in 2012. …show more content…

The technical products sales revenues accounted for only 20.9% of all, the ratio were 44.6% and 40% compared with Staples and Office Max respectively. 2. Weak Financial Performance A significant number of its vendors demand accelerated payments or require cash on delivery, such demands could have an adverse impact on its operating cash flow and result in severe stress on its liquidity. A downgrade in its credit ratings or a general disruption in the credit markets could make it more difficult for it to access funds, refinance indebtedness, obtain new funding or issue securities. 3. Weak Operating Performance Sales per retailing stores was average 6.4 million, the level stayed behind Office Max and Staples. The gross profit margin averages 30% while the operating profit margin almost 0%.
Opportunity
1. Expand online services As more consumers transfer their purchasing place from physical stores to online, OD could enhance the online selling power. 2. Acquisitions Staples’s revenue was twice the OD’s revenue, OD could merge with Office Max in order to compete with Staples at the same level. In addition, after that the alliance could integrate the source effectively and efficiently and cut more operating cost. 3. Emerging markets and expansion abroad Although the economy of America was sinking into mud, the emerging markets like the Golden Brick countries have much bigger purchasing power

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